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Agricultural Policy and Productivity: International Evidence
Author(s) -
Hu Fan,
Antle John M.
Publication year - 1993
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.2307/1349484
Subject(s) - productivity , agriculture , agricultural economics , agricultural productivity , natural resource economics , economics , international trade , business , regional science , economic growth , geography , archaeology
The aggregate agricultural production function is estimated jointly with a political model that explains differences in policy across countries and over time to test the hypothesis that agricultural policy has had a significant impact on aggregate agricultural productivity. The econometric results strongly support this hypothesis. However, this productivity effect is found to be large and statistically significant only for those countries that tax or subsidize agriculture moderately. In countries that tax or subsidize agriculture at a high rate, the impact of marginally‐reducing the tax or subsidy rate is not found to be significant, presumably because high levels of taxation or subsidization distort farmers' incentives to such a degree that marginal changes in policy do not measurably affect their behavior.